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News About My Favorite Country Thailand, which unfortunately, is going through a Democracy Crisis trying to Oust their Bush like Premiere Dictator Leader who has destroyed the democratic process. The Military did it and now see the the effects of it.

4/05/2007

`Bangkok Post' daily acts as voice of Zionist lobby in Thailand

`Bangkok Post' daily acts as voice of Zionist lobby in Thailand

Thailand Zionists

The Thai daily Bangkok Post affiliated to Thailand's Zionist lobby has been acting
as the voice of Tel Aviv in the major developments of the Middle East and world of
Islam.

During the 33-day war launched by the Zionist regime against the defenseless
people of Lebanon, in particular the disastrous genocide in Ghana which provoked
worldwide protest, in the articles of Bangkok Post, the oppressed Lebanese people
were branded as terrorists.

Meanwhile, concerning the issued related to Iran, the Thai daily gives special
attention to the interests of the Zionist regime.

The growing trend of Iran-Thailand political, economic and cultural relations,
which naturally makes Iran's role in the issues associated with Thai Muslims more
decisive, has always been challenged by this daily.

In the editorial of its Monday issue, Bangkok Post raised questions on Iran's
stance on British marines' violation of the country's territorial waters by repeating
the claims of the media associated with Zionist organizations.

The daily accused Iran's coast guards of taking into custody the British marines
in the territorial waters of Iraq.

Upon illegal entry into Iran's territorial waters on March 23, 2007, fifteen
British marines were arrested by Iranian coast guards.

Following such a violation, without paying any attention to the data and
information registered in the Global Positioning System (GPS) of the arrested
marines, British officials attempted to pretend through extensive media and political
propaganda that their servicemen have been arrested in Iraqi waters.

The arrested marines confessed to their illegal entry into Iran's waterways and
apologized to the Iranian people.

The media experts of Southeast Asia believe that the Bangkok Post editorial is in
line with the goals of the media centers associated with Zionists aiming to make Iran
give up its inalienable international rights.

3/11/2007

Dismantling Thailand's Shin Corp

Dismantling Thailand's Shin Corp

By Shawn W Crispin

BANGKOK - With this week's takeover of iTV, Thailand's new military rulers have made
their first move toward dismantling the telecommunication and media empires that once
provided the behind-the-scenes financial firepower for ousted prime minister Thaksin
Shinawatra's once powerful, now diminished, political juggernaut.

iTV represented a small part of the Shin Corp's corporate expanse, which currently
includes major holdings in telecoms, satellites, aviation, property development,
consumer finance and the Internet. Its mobile telecoms subsidiary, Advanced Info
Services (AIS), provides the lion's share of the conglomerate's profits and
catapulted Thaksin to billionaire status before he divested his shares to family
members when he took up the premiership in 2001.

The company's profits soared during Thaksin's political tenure, padded by his
government's policies aimed at pumping up domestic consumption through aggressive
state-bank lending and assorted cheap-credit schemes. With Shin Corp's share price
near a record high, and popular political pressure mounting against Thaksin, in
January 2006 his family sold the company to Singapore's state-run Temasek Holdings in
a controversial US$1.9 billion transaction.

The company has been under political assault ever since the military seized power
from Thaksin in a bloodless putsch last September. A Thai court last year ruled that
iTV had breached the terms of its original 1995 build-transfer-operate concession
with the Prime Minister's Office and imposed more than $2.2 billion in fines, fees
and owed interest payments. The station failed to meet a recent payment deadline and
the military junta rescinded its operating concession and is in the process of
determining which assets it can legally repossess.

To some market watchers, the highly anticipated move represents a form of forced
nationalization of a foreign-held asset. Shin Corp's shares fell 2.6% the day after
iTV's closure and so far Temasek has remained mum about the losses it will incur
because of the station's demise. In part, that's because iTV was the only perennial
loss-maker among the Shin Corp's otherwise profitable stable of companies.

But iTV's nationalization likely represents the first of a series of controversial
moves to dismantle and then redistribute to politically preferred players the Shin
Corp's various communications assets operated under state concessions. Coup leader
General Sonthi Boonyaratklin has in recent weeks stated the junta's intention for
national-security interests to seize three communications satellites that Temasek now
majority-owns through Shin Corp subsidiary Shin Satellite.

The potentially bigger blow will come if and when the junta follows through on its
apparent plans to rescind AIS's operating concession. Pridiyathorn Devakula, the
interim military government's finance minister and deputy prime minister for economic
affairs until last week, in January told a private meeting of foreign analysts
gathered to discuss amendments to the Foreign Business Act that it was "only a matter
of time" before they rescinded AIS's build-operate-transfer concession, according to
an analyst who was in attendance and who spoke to Asia Times Online on condition of
anonymity.

The Council of State is now reviewing legal matters surrounding a possible concession
rescission, which reportedly could be justified by alleged irregularities in the
manner in which AIS received its concession from the state-owned Telephone
Organization of Thailand (TOT) back in 1992. If so, it's unclear whether the
council's legal interpretation would allow for the government to make retroactive
demands - as it did in the iTV case - that would require AIS to pay the state
potentially billions of dollars' worth of penalties on previous profits and revenues.

Money in the bank
Those penalties could potentially be seized from the $1.9 billion the Shinawatra
family received in the Temasek transaction and now reportedly holds in
interest-bearing accounts at Siam Commercial Bank, which is controlled by the royal
family's Crown Property Bureau. Arguably, financial markets have not fully priced
this risk into the Shin Corp's share price, which has fallen from 31 baht per share
on the day of last year's coup to 24.6 at Thursday's close of trading.

Large foreign hedge funds, including the United States' Farallon Capital, at least
into February held AIS's liquid shares in some of their emerging-markets portfolios.
Fitch Ratings recently placed AIS on a rating negative watch because of what it
referred to as "heightening policy, regulatory, and legal risks that could
substantially affect the major telecom operators in Thailand" and that "rising policy
uncertainties may lead to a review of concessions".

HSBC has recently warned its clients about the possibility of a nationalization of
Shin Satellite's assets, but one of its senior analysts who spoke on condition of
anonymity to Asia Times Online said that its telecommunications department had not
yet issued a similar downgrade warning on AIS because of a lack of evidence about the
government's plans. Shin Corp chief executive officer Boonklee Plangsiri failed to
reply to e-mailed questions from Asia Times Online about reports that AIS is poised
to lose its operating concession.

Certain hedge-fund managers and investment bankers who have recently visited Thailand
and met with Asia Times Online have universally asserted that if the government moves
on AIS on perceived flimsy legal grounds it will further undermine broad investor
confidence, not only in its economic management but, more crucially, in its ability
to protect foreign investments legally.

"It would represent the last straw," said one senior hedge-fund manager, who, like
many foreign portfolio investors, ill-received the junta's December 19 surprise move
to impose capital controls on certain types of short-term foreign investments as well
as its planned nationalistic amendments to the Foreign Business Act, which are
scheduled to take effect this month.

Dampened foreign sentiment is arguably already taking an adverse toll on the Thai
economy. Some foreign investment banks have recently downgraded their economic-growth
forecasts below 4% for this year, because of stagnant new private investment,
declining domestic consumption, and signs that the bureaucracy has been slow to
disperse fiscal stimulus measures. According to Phatra Securities, a local investment
bank, nearly $1 billion worth of capital flowed out of Thailand in January because of
the 30% non-interest-bearing reserve requirement on foreign investments included in
the capital controls.

That increasingly puts the junta between a rock and a hard economic place in its
apparent pursuit of dismantling Thaksin's commercial legacy. Yet there are a number
of other legal avenues the junta could pursue against Shin Corp, including possible
charges of tax evasion, subversion of the judicial process, and constitutional
transgressions, that would present a more genuine veneer of legal impartiality -
while allowing the junta to accomplish the same political ends.

Never tried charges
Shin Corp and its subsidiaries were widely recognized throughout their corporate
histories as some of Thailand's best-managed companies. Yet there are a handful of
controversial episodes that under Thaksin's political tenure were arguably
under-investigated, but through new independent probes might cast the company's
tightly managed image of good governance into doubt - or worse.

One strongly alleged - but never investigated nor tried in court - tax-evasion case
stands out in particular. A lightly circulated October 2003 research report by
Pyramid Research, a US-based consulting firm, raises hard questions about possible
tax evasion related to AIS's use of the 1800 bandwidth frequency acquired in its
purchase of the Digital Phone Company (DPC) in 2000 from Samart PCL and Telekom
Malaysia.

The well-reasoned report contends that AIS, then facing a serious capacity crunch,
was systematically underreporting the number of post-paid customers it was roaming on
to DPC's network, in effect allowing AIS to avoid paying the higher concession fees
DPC contractually owed the state. Under the DPC's operating concession, it was
required to pay 32% of its revenues to the state-owned operator-cum-regulator TOT;
AIS's concession, on the other hand, only required it to pay 24%.

Moreover, the report made compelling thitherto-unexplored allegations that under
Thaksin's government the TOT and AIS had entered into a de facto "strategic
partnership" that gave AIS an edge over its local competitors. The report noted one
particular example of AIS selling its loss-making pager company in 2002 to TOT for
255.78 million baht (about $7.75 million at the current exchange rate), a generous
amount considering the state agency already legally owned the assets and previously
had not paid anything for other decommissioned pager companies. [1]

There are also the unresolved tax-evasion allegations lodged against Shin Satellite
by an opposition politician, who based his charges on information he had received
from a former company customs employee who apparently had access to documents related
to the import of expensive capital equipment. That case's proceedings were thrown
into a tailspin when the witness was shot and killed in 2003 by masked assassins
while he was riding on his motorcycle in the northern province of Chiang Rai.

There has arguably never been a proper official investigation into the circumstances
surrounding the former Shin Satellite employee's death. When this correspondent
inquired about the situation in an interview with Shin Satellite CEO Dumrong Kasemset
in January 2006, he immediately broke off the one-on-one interview.

At the very least, there is a compelling case for the military government to open an
independent probe into both the mysterious murder and the original tax-evasion
charges - neither of which has ever been given proper official treatment. It could
also look into the circumstances behind the eight-year tax holiday worth $400 million
the Prime Minister's Office-run Board of Investment granted Shin Satellite in 2003,
representing the first, and apparently only, time the foreign-investment promotion
agency made such an award to a Thai-owned company.

The government could also have pursued a more damning case involving iTV on charges
that Thaksin violated constitutional press-freedom guarantees through his
government's alleged manipulation of the station's news coverage to his political
party's advantage. Unfortunately, the junta is in no position to take the moral high
ground on press-freedom issues because of its abolition of the 1997 constitution and
its own heavy-handed policies and overt censorship of the broadcast media.

Instead, the junta's handling of Shin Corp seems set to mirror its stumbling ways in
prosecuting the other charges it has leveled against Thaksin and his associates to
justify last year's coup. The government's enduring failure to nail down with hard
corroborating evidence the corruption and political crimes Thaksin allegedly
committed risks losing the support of the Bangkok elite and middle class that
initially strongly backed the military intervention.
Should the junta similarly be perceived to mishandle its pursuit of charges against
the Shin Corp, perhaps even more dangerously, it risks further undermining already
waning foreign-investor confidence in its leadership, bringing on a destabilizing
economic meltdown.

3/05/2007

Thailand's Royal Wealth

Thailand's Royal Wealth

A man, let’s call him Somchai, lives in a prime location in central Bangkok.
Now in his sixties, Somchai designed and built his house himself nearly 30 years ago.
He doesn’t own the land, but he only pays about 400 baht ($11) in rent to his
landlord.

So why does he now wish he lived somewhere else?

“If I could do it all over, I wouldn’t build on this land,” he
told Asia Sentinel. “There is no security. I can get kicked off at any
time.”

But he won’t go voluntarily. Somchai’s land, you see, is owned by the
King.

In fact, most of Bangkok’s best real estate is owned by Thailand’s
royal family through the Crown Property Bureau (CBP), which manages the
monarchy’s land holdings. Somchai was able to build the house by bribing bureau
officials a few decades ago. Now if he sells it, 75 percent of the money will go to
the CPB, giving Somchai—who is retired with little savings—no incentive
to leave.

“The people around here all worry that they might be forced out, but
we are too scared to talk about it,” he said.

That fear of upsetting the monarchy goes a long way to explain why so little has
been written about the Crown Property Bureau. King Bhumibol Adulyadej’s golden
robe shields the bureau from public criticism, allowing it to oversee a modern form
of feudalism with little scrutiny.

More than any institution over the past hundred years, the CPB has shaped Bangkok
and in recent years it has only picked up speed. Since recovering from huge debts
incurred during the 1997 financial crisis, the CPB has aggressively sought to boost
profits from its prime Bangkok land plots, often pushing out poorer shop owners and
tenants that have lived on the land for generations.

The ceaseless development of huge malls, hotels and office buildings is rarely
debated as the bureau avoids public criticism. When its officials do speak, they
simply tout the king’s theory of a sufficiency economy, which preaches
moderation, reasonableness and immunity. As the bureau has found, however, the best
immunity from an economic downturn is to make sure its birthright properties are
yielding large amounts of cash.

Claiming the land

Talk of that sufficiency economy has been replaced with a 13-billion-baht grand
vision to turn famed Rajadamnoen Avenue in Bangkok’s historical district into a
shopping street known as the “Champ Elysees of Asia” – that brand
name ought to bring a smile to former Prime Minister Thaksin Shinawatra, who royalist
coup leaders have blasted for failing to adhere to “sufficiency economy”.
The bureau owns much of the area, and said it would not renew 137 contracts after
they expired in 2004.

A new part of the CPB’s strategy was to turn much of its prime land into
shopping centers and luxury housing. The CPB also signed a 30-year lease with Central
Pattana to transform the World Trade Centre near the Chidlom Bangkok Transit System
station into Central World Tower, an enormous hotel, office and shopping plaza in the
heart of Bangkok. It also joined hands with Singaporean property firm CapitaLand to
form a local subsidiary.

In addition to Central World, the CPB owns the land on which a host of the
city’s largest malls are located, including MBK Shopping Center, Siam Center,
and Siam Paragon. Coincidentally, Kempinski Hotels and Resorts, a Europe-based
company majority-owned by the bureau, will manage the new luxury hotel being built
next to the Paragon.

In recent years the bureau has also shocked longtime residents of various
traditional marketplace districts by giving them eviction notices. Previously they
had always felt safe living on “the king’s land.” In Chinatown,
Thai-Chinese families that lived on CPB land on Soi Luenrit for three generations
were kicked out so a property developer could put up a jarring shopping mall that is
out of character with the historic neighborhood.

In Charoen Phon, residents were told to leave their shophouses to make way for a
Tesco Lotus superstore. In Klong Thom, another Chinatown market, the bureau sent
marching orders so a developer could build a new market that yielded higher rents. At
the old fish market on Charoen Krung on the Chao Phraya River, traders fear that
thousands of unskilled laborers will soon be out of work. The CPB wants to turn the
traditional market into a 7-billion-baht high-rise hotel, condominium and commercial
complex. The Silom Club, an 89-year-old sports club that some regard as a historical
monument, will also be turned into a high-rise.

The results of the new strategy have paid off grandly. In 2003, the CPB recorded
revenue of four billion baht. About 1.7 billion baht of that came from increased
rents, shattering the 1 billion baht target Bureau director-general Chirayu
Isarangkun na Ayutthaya had set four years earlier. In 2004, the bureau’s
earnings reached five billion baht. Chirayu announced that the CPB was now healthier
than before the 1997 crisis.

Bangkok’s tallest skyscraper

The Crown owns vast tracts of Bangkok

But as the bureau’s ambitions grow, the more it is entering the public
spotlight. While eviction is never easy, two high-profile spots are getting more
press. At Bo Bae market, City Hall asked vendors to move off the street, where they
had been blocking traffic, and into another building. Although the CPB is not
evicting anyone, it owns the land and offered a concession to a developer to build a
new market that was supposed to house the evicted Bo Bae vendors. Police were called
in at one point when vendors refused to budge, and some have gone elsewhere. The
developer, meanwhile, is upset that many in the market have not moved into the new
building. The fight looks set to go on, as some vendors are standing firm and have
vowed to go to jail if necessary.

A larger fight could potentially take place at the Suan Lum Night Bazaar, where
reluctant vendors have been given until April to vacate what has quickly become one
of the city’s surprising tourist attractions. Some see the battle over the
largest plot of land in Bangkok’s central business district as a prime example
of how the CPB is patient in getting what it wants.

In the 1950s, the Navy controlled this valuable plot of land next to Lumphini
Park, but the military-run government of Sarit Thanarat transferred it to the Army
after he suspected Naval officers of using the site to plot a coup against him. It
then became home to the Armed Forces' Preparatory School, which opened in 1958.

In 1993, the CPB told the Supreme Command to move the school when its lease
expired in 1999 in order to ease traffic congestion. Since then, plans for the
20.6-hectare site have been mired in controversy. Initially it was to become a
350-meter tall telecommunications tower 49 percent-owned by the bureau. Then it was
set to become the headquarters for Siam Commercial Bank, in which the CPB has a
controlling stake.

But all along, the military pushed for the land to become a public park in a city
starved for green space. So when it emerged in 2000 that the bureau would turn the
land into the Suan Lum Night Bazaar, a kitschy night market for tourists, many
criticized the move. “The shopping mall is an eyesore and a disgrace,”
said leaflets distributed at the site by military school alumni. “This is
against a social contract made with pre-cadet students.”

The CPB responded in 2002 by saying the move was intended only to recoup some cash
spent relocating the military school. In a statement reported at the time, the bureau
said that long-term the land would be used for “educational, cultural and
recreational purposes.”

Many suspected, however, that the bureau only wanted to lease the area to the
night market in order to change the zoning from educational use to commercial and
residential. That happened in 2002, when Thaksin’s government passed a law
changing the status of the land plot. Indeed, by 2004 it was clear that the site was
actually the pillar of the CPB's expansion plans.

Director-general Chirayu said the sprawling market would be turned into a
100-billion-baht commercial complex filled with offices, retail outlets,
condominiums, entertainment venues and a hotel.

Last June, the bureau announced that it had short-listed Central Pattana Plc,
Sansiri Plc and TCC Land as developers for the site. The company that operates Suan
Lum also submitted a proposal to expand the site while retaining the popular Night
Bazaar and its many vendors; that was rejected.

Central Pattana, which runs Central World Tower, has said it wants to redefine the
city’s skyline by erecting Bangkok's tallest skyscraper on the site. The bureau
is expected to announce the winner next April.

Royal cloak

This popular night market was used as a ploy to change zoning regulations Despite
any setbacks, what keeps the bureau strong over the long haul is the lack of critical
public input or media coverage. Sure, some attacks do appear on certain web boards,
but business editors in Bangkok know better than to write anything about the CPB for
fear of upsetting the monarchy, and the bureau is happy to keep it that way.

This immunity was most apparent after Singapore-government run Temasek Holdings
bought Shin Corp from Thaksin’s family in January 2006. The sale was the
tipping point for Thaksin, who responded to mass protests by calling early elections.
Months of deadlock ensued before the military, with the backing of the palace, pushed
the twice-elected premier from office. Most criticism of the deal centered on the
complicated shareholding structure Temasek used to purchase Shin in such a way that
it could bypass foreign ownership restrictions.

Although this seems devious, the practice had been standard operating procedure in
Thailand for decades before Thaksin’s political opponents seized on the
issue.

It turns out that Kularb Kaew, one of the companies in the Temasek-led consortium,
was acting as a nominee for Temasek. Shareholders of Kularb Kaew included Pong
Sarasin, the brother of Arsa Sarasin, King Bhumibol’s principle private
secretary. Kularb Kaew owns part of Cedar Holdings. The other owners of Cedar are
Temasek and Siam Commercial Bank, in which the Crown Property Bureau has a
controlling stake. SCB also played a crucial role advising and providing financial
support for the deal.

Despite these interlocking interests, public anger was directed solely at Thaksin
for “selling off” a valuable Thai national asset to foreigners. SCB and
CPB were barely mentioned in the local press, even though they actively helped
Temasek allegedly violate the law.

The issue gets even more bizarre. The currently military-appointed government
recently proposed changes to the law to stop the longstanding practice of foreigners
using nominees to buy Thai companies. The new Commerce Minister Krirkkrai Jirapaet
had said the changes were necessary because the Shin purchase through nominees
“led directly to the fall of a government”— the implication being
that Thaksin himself was responsible for the army driving tanks into Bangkok and
tearing up the Constitution.

The Crown Property Bureau also has longstanding ties to Singapore. Temasek owned a
stake in SCB long before the Shin deal transpired, and Chirayu has said the
state-owned investment vehicle has been a “good partner for years.”

Chumpol NaLamlieng, who served as president of Siam Cement for 12 years, is now
chairman of SingTel, which is owned by Temasek and holds a 21 percent stake in
Advanced Info Service, the market-leading telecommunications company founded by
Thaksin and Shin Corp.

Since everyone knows everybody in this elite circle of friends, it came as a shock
to many that Tongnoi Tongyai, the private secretary to Crown Prince Maha
Vajiralongkorn, seemed set to join the Shin board and then was quickly disowned by
the palace. The episode was certainly awkward. While the sequence of events remains
opaque, some claim the prince gave the go-ahead for Tongnoi to join the board, which
led to a public announcement, but King Bhumibol nixed the deal. Vajiralongkorn then
issued a bizarre and shocking public statement lashing out against Tongnoi.

“HRH the Crown Prince's Personal Office considers MR Tongnoi Tongyai a
perverse abuser of power for his own benefit,” the statement said. “His
acts have misled the public and harmed HRH the Crown Prince's Personal Affairs
Office, which thus finds itself obliged to publicize the facts of the
matter.”

Of course, since he had offended the throne, Tongnoi was not able to defend
himself.

The incident didn’t go away easily, however. Post Today, the Thai-language
sister paper of the Bangkok Post, had to pull thousands of copies off the printer one
recent night because a story quoting a leftist academic said the press should
investigate why Tongnoi was dismissed in such a strange manner. Vajiralongkorn
eventually called a group of reporters to the palace, where he reportedly asked them:
“Do you have a problem with me?” Nobody spoke up.

Moral money-making

The Crown Property Bureau’s operations are important to scrutinize in light
of the September 19 coup. It was argued that the coup was justified because Thaksin
abused his powerful position to boost the financial gains of his many companies,
intimidated the media into favorable reporting, and flaunted foreign ownership laws
and tax loopholes in his family’s sale of Shin Corp.

These arguments certainly have merits, but they are dubious justifications for the
palace-supported coup. The CPB is also guilty of what Thaksin is accused of. The
bureau has used its powerful position for decades to acquire its massive
landholdings, winning favorable business deals and paying no taxes. It intimidates
the media by linking itself to the god-like Bhumibol, leaving newspapers afraid to
touch it for fear of violating lese-majeste laws.

Some may argue that this doesn’t matter, as the Crown Property
Bureau’s assets are technically national property. Yet if that’s the
case, then it should shed its opaque “semi-private, semi-public” legal
status and open its books for all to see where the money is going. As of now, all
anyone has to go on is the words of executives and the general belief that they must
be morally outstanding because of their closeness to the royal family.

This moral image is crucial to the success of the monarchy and its financial arm.
Thaksin was certainly well loved in many parts of Thailand, but was reviled in
Bangkok by royalist elites who eventually saw him as a rival to the all-powerful
Bhumibol. This opened the door for attacks that questioned Thaksin’s moral
ability to lead after his family sold Shin to Temasek.

Thaksin didn’t help his cause when he openly boasted that his critics were
“jealous” of him. Enraged opponents called him greedy and said he
didn’t have the kingly attributes to run the country.

Bhumibol, on the other hand, has adeptly crafted an image of a loving father who
always has the country’s best interests at heart. He preaches sufficiency
economy in an effort to distance the palace from the consumerism that it helps create
through opening lavish malls on some of Bangkok’s best properties. You
don’t see CPB using much of that land for green space to contemplate the
serenity of nature.

If this image was not so carefully cultivated—if Bhumibol were a mere man
with rather than a Buddhist dhamma king—then ordinary Thais might ask how it
came to be that one family managed to grab so much land. They might even start to
demand that they receive “fair value” and an opportunity to have a slice
of the pie.

As long as the elderly Bhumibol is around, this is unlikely to happen. But the
monarchy must ensure a smooth succession, otherwise the public may demand that some
light finally shine on the bureau’s murky finances.

The Crown Property Bureau and How it Got That Way:

Centuries of Thai history have solidified into massive property ownership
by the Thai monarchy

The history of the land owned by the Thai monarchy, and thus the Crown Property
Bureau, can be traced as far back as the Buddhist kingdom of Sukothai in the
13th century, as traditionally in Thailand the king owns all the land.

In the 1800s, the monarchy set up the Privy Purse to use the profits from royal
trading to pay the royal household, and it was later used to finance overseas
education for royals. At least five percent of government revenues were transferred
into the Privy Purse each year. In 1890, it became the Privy Purse Bureau
(PPB), acting as the monarchy’s investment arm, according to “A History
of Thailand” by Chris Baker and Pasuk Phongpaichit.

The government funds flowing into the PPB increased to about 15 percent of state
revenues and the money was used to invest in rice mills, property developments, shops
and provincial markets.

“As roads were built the price of land increased, and this attracted the
elite and the PPB to invest in land and land related business such as market places
and row houses,” wrote Porphant Ouyyanont, an economist at Thammasat
University, in an academic paper. “A survey of land prices in Bangkok in the
first decade of the 20th century shows that the price of land was highest in the
areas where roads were cut.”

During this time many Chinese families who prospered through royal patronage
formed banks and shipping companies to export rice. But a series of poor harvests
from 1904 to 1908 led to a financial crisis.

The monarchy, meanwhile, had set up Siam Commercial Bank with capital from
government revenues, allowing it to survive that economic downturn. SCB extended
loans to the Chinese merchants, who survived for a little while longer before the
monarchy’s bank seized their assets when they defaulted on loans.

By 1910, the PPB was the country’s largest property owner, with about
one-third of all land in central Bangkok. It held investments in railways, tramways,
electricity, banking, cement, coal mining and steam navigation. In addition to
reclaiming land through bad debts, it was able to occupy public land, and could
directly buy land from whomever it wanted.

The bureau “always had the advantage in terms of obtaining information on
road cutting, the price of land, the advantage of land location and so on,”
wrote Porphant. “In this way the PPB acquired many plots of land established at
good locations and commercial centres.”

Often the PPB would buy a plot of land to build houses, and then demand that the
government build a road nearby to increase the prices of land and properties.

“The linking of Bangkok's administrative structure with royal interests
produced both a physical and economic stamp on Bangkok which has had an enduring
effect on the city's development,” Porphant wrote.

Absolute Monarchy Ends

Some people are just born luckyAlthough in 1932 a coup ended the absolute
monarchy, the putsch leaders wanted to keep the monarch in a symbolic position to
help control the masses. In bargaining over his diminished role, King Prajadhipok, or
Rama VII, at one point threatened to sell many royal possessions, including palaces,
shrines and even the Emerald Buddha, which sits in the Grand Palace to this day.

The new government passed laws transferring control of the Privy Purse Bureau to
the government, and subjecting the king to an inheritance tax. Unsurprisingly, King
Prajadhipok failed to sign the legislation.

After the king abdicated in 1935, the Privy Purse was divided into
Prajadhipok’s personal property and the Crown Property Bureau, which fell under
the Ministry of Finance. That year, a New York Times story said the
king’s property yielded 500,000 pounds sterling annually, or about 6.5 million
baht at the time. An unskilled laborer in Bangkok at the time would make about one
baht for a day’s work, meaning he would have to work for 17,808 years to amass
as much as the palace made in 12 months.

In 1936, the Royal Assets Structuring Act declared that all Crown Property Bureau
income was tax exempt, although the king must still pay taxes on his personal
fortune. “National assets are exempted from tax, so therefore the king’s
assets are exempted, because they are the same as national assets,” section
eight of the law says.

Thawiwong Thawalyasak, educated in Cambridge and a page to Rama VI, persuaded the
government to recognize the palace’s ownership of property that fell into
private hands after Prajadhipok was gone, according to Paul Handley’s book,
“The King Never Smiles.” Thawalyasak made tens of thousands of residents
on this land start paying rent to the Crown Property Bureau, and began evicting those
who wouldn’t pay. He even tried to evict the parliament, but the lawmakers
refused.

The consolidation of property under the CPB allowed the monarchy to slowly rebuild
its fortune. By the 1960s, Siam Cement, the majority palace-owned industrial
conglomerate, as well as Siam Commercial Bank (SCB), were growing with the strong
economy.

The palace became the ideal joint venture partner. Its land was used to build
major hotels like the Siam Intercontinental, the Erawan and the Dusit Thani. It held
investments in insurance, agribusiness, tires, and textiles. By the late 1960s,
Handley writes, the CPB had 500 staff members to oversee its investments and property
holdings.

In 1970, Thawiwong died, and the ensuing decade saw failed investments like Air
Siam, an airline meant to rival Thai Airways, and other challenges to the CPB
empire.

In one case noted by Handley, the bureau ordered slum dwellers at Mu Ban
Thaepprathan to vacate the premises so it could be commercially developed. “The
very public fight against eviction generated comparisons between the CPB and
officials who evicted poor farmers from degraded state forests,” he wrote.
“When student activists got involved and likened the palace to a landowning
feudalist, the embarrassed palace halted the project.”

In the late 1970s, the Communist Party of Thailand had launched an offensive
against the monarchy, criticizing its extravagance. At one point, the communists
broadcast comments saying: “The more powerful the monarch becomes, the poorer
the people become, and the more the monarch’s income from land rental, his
shares in commercial companies and his bank savings increase.”

Prem brings stability

By the early 1980s, the communists had suffered a series of setbacks, and many
took up an amnesty offered by former army chief Prime Minister Prem Tinsulanonda, who
now heads Bhumibol’s 19-member privy council. Under Prem’s watchful eye,
royal projects funded by CPB revenues greatly expanded, along with the enforcement of
lese-majeste laws, ensuring that criticism of the palace came to a halt.

In 1988, the CPB held stakes in about 40 companies, and the stock exchange was
booming. Its holdings in Siam Cement and SCB alone were worth more than $600 million,
not to mention the value of its 40,000 acres of land, including 13,300 in
Bangkok.

The bureau’s burgeoning wealth put it on the radar screen of the foreign
press, and the Far Eastern Economic Review wrote a cover story on the CPB in June
1988 called “The King’s Conglomerate.” In it, Chirayu Isarangkun Na
Ayuthaya, the longstanding CPB director who had only been on the job a few months,
said the bureau is neither public nor private.

“We are a little of both,” he told the magazine. “Our charter
appears to highlight the image of a public entity. But we also enjoy flexibility
similar to [but not totally on a par with] a private enterprise.”

The article added that the CPB’s operations are “supervised” by
a five-man committee headed by the finance minister. The king is supposed to be
consulted on important matters, the article says, “but actual royal involvement
is rare.”

The story made no mention of the hybrid company’s unfair advantages, and
didn’t question the legal gray area the CPB operates in. For instance, if the
CPB gets so many state privileges and operates under the Ministry of Finance, why is
its annual report only for the eyes of the king?

A former Finance Ministry official familiar with budgets says that although the
government technically runs the CPB, in reality the decisions are made by the
monarchy.

“Actually the king is supposed to play a symbolic role,” he told Asia
Sentinel. “But this is Thailand.”

The king’s personal fortune sits with the Privy Purse. Although the palace
gets a stipend from CPB revenues, the rest of the money goes to support the
institution of the monarchy, including the many royal projects and propaganda
activities. But the details of who gets what are not for public consumption.

Handley argues that the royal projects, along with low rents and media campaigns,
were an orchestrated effort by the palace to win political support for the throne.
This could be seen from the many villagers who petitioned the king directly to help
them.

“Details about these petition cases remain a closely held secret of the
palace, with the secrecy enhancing the very mystery of the king’s wisdom and
ability to improve the lives of his subjects,” he writes. “The cases
divulged a greater truth, though: the more the king’s works were advertised by
Prem at the expense of the government’s, the more the people looked beyond the
government to their king for escape from misery.” Without funds from the CPB,
this would be impossible.

Rapid expansion

Things only got better for the palace business conglomerate in the early 1990s.
Chirayu aggressively sought deals with developers that would give the CPB a return of
share rentals and equity. It put more money into small restaurants, luxury
condominiums, shopping complexes, hotels and office space. The new leases
substantially increased CPB income and the king’s personal wealth. In 1990,
Handley writes, dividends to the Mahidol family (Bhumibol was the son of Prince
Mahidol of Songkhla and the grandson of King Chulalongkorn) reached US$30 to $40
million per year tax-free, and the holdings of the royal family were worth more than
$1 billion. Estimates now put Bhumibol’s personal wealth at between $2 billion
and $8 billion.

The crown also had big plans. Its media arm sought to buy Thai-language dailies
and a television station, as well as build a film production studio and tourist
attraction to rival Universal Studios. The CPB had subsidiaries involved in
advertising, cable television, financial services, construction, cinemas, insurance,
hospitals, and petrochemicals, among many others.

During this time, a few questionable deals surfaced. In 1996, the government
investigated when Siam TV & Commercial, a joint venture between the CPB and SCB,
won a concession to run a commercial television station, iTV. The company won the
30-year contract with an offer of 120 billion baht in royalties, even though a rival
company offered royalties of 625 billion baht. The results of the investigation were
never reported.

Also in 1996, the CPB sought to acquire a 15 percent stake in rehabilitated First
Bangkok City Bank from the central bank for 8.50 baht a share, even though the market
valued them at 22.50 baht per share. The deal was arranged by Finance Minister
Surakiart Sathirathai, who is married to Suthawan Sathirathai, a niece of Queen
Sirikit. The successor for Surakiart, who also served in Thaksin’s
administration, canceled the order, saying “the fund stands to lose too
much.”

Crash

When the government floated the baht on July 2, 1997, the Crown Property Bureau
was devastated. Its media arm, already struggling before the crash, quickly went
bankrupt. Siam Cement and SCB were also shaken, and Chirayu took over as board
chairman of both companies. Siam Cement had not hedged US$4.2 billion in foreign
debts, resulting in a $1.2 billion foreign exchange loss in 1997. Siam Commercial
Bank was worse off, as loan collateral didn’t even cover half of the loans
given out. The bureau’s total liabilities hit six billion baht.

By 1998, Chirayu said it was time to “bite the bullet.” The CPB
announced that it was cutting 143 billion baht worth of new projects and adopting the
king’s “sufficiency economy” approach. It would now focus on its
core investments in Siam Cement and SCB, as well as try to extract more money from
its leases.

“We're told not to be greedy,” Chirayu told reporters. “Our
problem in the past when the economy was in good shape was that we received many
investment invitations and we agreed. From now on, we need to be careful and our
investment policy will hinge on the macroeconomic prospects. We must not invest in
risky projects.”

Getting a “fair return”

The bureau received a large amount of help post-crisis, although its earnings
reportedly dropped 80 percent in 1998. Honda Motor raised capital in its struggling
local unit partially owned by the CPB and offered to sell the stake back to the
bureau at book value in 10 years. At the same time, Chirayu insisted that the
government help bail out SCB, even though it was strictly a commercial
enterprise.

The government proceeded to inject $1 billion to bail out SCB and agreed to sell
back its stake to the bureau in the coming years. The CPB did so in 2004 when it
traded a piece of land near Victory Monument to the Finance Ministry, which
technically oversees the bureau, for a 13 percent stake in SCB.

After the financial crisis, Thaksin also helped the palace out when he paid $60
million for SCB’s stake in iTV, which for a brief period was the only
independent television station in Thailand. “With little likelihood of ever
recovering the investment, Thaksin was effectively bailing out the bank and the
palace,” Handley wrote.

The CPB also set a goal in 2000 to increase revenue from rents from 300 million
baht per year to one billion baht by 2005. It would raise rents across the board,
including for the cash-strapped government agencies that supposedly controlled the
bureau.

“We will focus on both areas and try to maximize benefits from our
assets,” Chirayu said. “We also have no plan to invest in any new
projects.”

Having learned its lesson, the CPB restructured in 2001. Chirayu announced that
the CPB would shed its “antiquated” way of doing business to get a
“fair return” on its holdings. The bureau created CPB Equity to look
after its equity investments and joint ventures, and CPB Property to look after its
land holdings.

Things suddenly got much better the following year, and the halt on investments
was lifted. Helped by a team that prominently featured American business consultant
Michael David Selby, the Crown Property Bureau announced that it repaid its debts
from the financial crisis and was “now financially strong,” according to
executive Yos Euarchukiati.

In fact, its plans, as the ensuing years have shown, were bigger than ever.

2/16/2007

Thailand's new economic logic

Thailand's new economic logic

by Shawn W Crispin

BANGKOK - Thai Prime Minister Surayud Chulanont says his interim government has
launched a "year of great reforms", with changes aimed at putting the economy on a
more sustainable long-term track. Many foreign investors, on the other hand, are
howling that recent government policies are woefully out of step with market
mechanisms and, if not reversed, could eventually cause Thailand's economic
demise.

So who's right? In an effort to erase ousted prime minister Thaksin Shinawatra's
legacy, Thailand's new military-appointed government is indeed leading the country in
a fundamentally different economic direction. Foreign investors and the
market-fundamentalist Western media have roundly blasted Bangkok's recent decisions
to impose capital controls, limit foreign ownership for certain service-sector
investments, and broadly implement King Bhumibol Adulyadej's untested "sufficiency
economy" concept.

Many investors voted with their feet when the capital controls were first imposed
in mid-December, driving down the Thai bourse 18% in a single day. But after equity
investors were exempted from the controls, the stock market has recovered most of
those losses, and now big foreign hedge funds have flocked to Bangkok to seek out
potential opportunities amid the policy confusion.

Meanwhile, the Thai currency, the baht, has continued to appreciate against the US
dollar, trading at a recent high of about 33 to the greenback in offshore markets
despite the capital controls on currency transactions. After introducing widely
perceived nationalistic amendments to the Foreign Business Act in early January,
major export-oriented multinationals, including China's Huawei, Japan's Panasonic and
the United States' Ford, have since made major new commitments to their
Thailand-based operations.

If Thailand is headed for economic doom, it's not yet apparent. Rather, a grudging
consensus is emerging among more seasoned Thai observers that there is a technocratic
logic to the government's thinking. Although not admitted publicly, the capital
controls policy was likely designed as preemptive action against an anticipated major
global economic shift: the steep and long-term decline of the US dollar and
economy.

The Bank of Thailand is not the region's only central bank grappling with the
financial wisdom of accumulating ever more US-dollar-denominated assets. For China,
which has accumulated more than US$1 trillion in foreign denominated reserves, or
nearly 42% of its gross domestic product (GDP), through years of runaway trade
surpluses is actively pursuing new ways to hedge its massive stock of depreciating
dollars.

Albeit on a smaller scale, it's an equally important issue for the region's other
export-geared, dollar-earning economies, including Malaysia, Singapore and Thailand,
where respectively exports account for 108%, 197% and 70% of GDP. That Thailand is
now partially turning away from the openness that previously fueled its economic
boom, bust, and recent strong recovery is particularly significant. And it could yet
herald a broad regional move away from reliance on Western capital and export markets
and toward more inward-looking and even protectionist economic strategies.

Historical vanguard
If so, it wouldn't mark the first time that Thailand was on the vanguard of a
sweeping regional economic trend. Throughout the 1980s and 1990s, Thailand was at the
front edge of Asia's export-driven economic emergence. Then, Japanese multinational
corporations rapidly transformed Thailand's backwater economy into an export-fueled
global powerhouse. Thailand also famously led the region into financial crisis in
1997, when foreign investors perceived cracks in the debt-driven facade and
underscored the economic risks to developing economies of unregulated short-term
capital flows.

Thailand's new direction is partially a nationalistic reaction to that bitter
experience, driven a decade later by traditional elites now represented in
government. The prevailing confusion surrounding the sudden implementation of capital
controls and anti-foreign amendments to the Foreign Business Act, followed by earnest
assurances by senior officials that Thailand will continue to engage with the global
economy, has purposefully obfuscated the government's inward-looking intentions.

The Bank of Thailand has somewhat disingenuously maintained that the motivation
for imposing capital controls was to protect Thai exporters from an appreciating
baht. Yet Thai exports surged 17% last year, higher than consensus projections and in
spite of a 15% appreciation of the baht against the dollar. The more complicated
explanation for the central bank's move is precisely the opposite: that Thailand is
now exporting too much, not too little.

Respected Thai economist Supavud Saicheua - on all accounts a dedicated free
marketeer - makes that contrarian argument in an exceptional new research report, in
which he argues that Thailand can no longer find efficient ways to allocate all of
the US dollars it is earning through record levels of exports. He argues that with
exports now accounting for 70% of GDP - more than double China's 34% ratio, and well
over the world 24% average - Thailand is long overdue for a structural economic
adjustment.

To be sure, buoyant exports sparked economic growth and helped to restore the
national accounts after the 1997 financial crisis, allowing Thailand to pay back the
International Monetary Fund two years ahead of schedule, and shave external debt down
from a crisis high ratio of 90% of GDP to its current level of about 34%.

With those external bills now paid, and the previous government's various
import-intensive infrastructure spending plans put on ice, exports are now arguably
generating more dollars than the Thai economy can efficiently absorb - similar to the
inrush of foreign capital that inflated Thailand's 1997 bubble, yet different in that
the foreign-denominated flows are being earned rather than borrowed.

Equitable economics
Enter King Bhumibol's "sufficiency economy" concept into Thailand's new policy mix.
The government's precise ideas for implementing the revered monarch's widely
misunderstood philosophy are now starting to come into sharper focus. And they appear
to jibe with the wider academic literature dedicated to sustainable economic
development, which contrary to Western capitalism's drive for short-term maximum
profits, strive for the long-term optimal use of resources.

It's literature that's just now beginning to get a serious second reading, with
the emerging global consensus surrounding the risks of greenhouse-gas-driven global
warming, and related realizations that multinational manufacturers' operations often
recklessly degrade the natural environment of less litigious and lightly regulated
developing countries. [1]

"The sufficiency-economy philosophy is a Thai model for sustainability, the
importance of which is only now becoming recognized around the world," Surayud said
last week to a meeting of the Joint Foreign Chambers of Commerce. "As an early
adopter of a sustainable approach to development, Thailand should, I believe, be
praised, for it is on a path down which every country or company will have to travel
sooner rather than later."

This week, Surayud called on Thai industrialists to begin implementing the
monarch's concept, namely through risk-management tools that allow for greater
flexibility and minimize debts, greater investment in human resources and research
and development, and setting business targets focused more on long-term rather than
short-term returns. The royalist premier also suggested that - contrary to the global
capitalist order - Thai factory owners should refrain from taking advantage of
consumers, labor, or material suppliers.

Significantly, Surayud's government is re-exerting sovereignty over Thailand's
future economic direction from a position of economic and financial strength -
providing crucial insulation to a market backlash against its contrarian philosophy.
While imposing capital controls on certain types of foreign inflows, the Bank of
Thailand in January more quietly eased longtime restrictions on Thai nationals
investing abroad, allowing mutual funds and securities companies to invest as much as
$50 million offshore without central-bank permission. Depending on the eventual
implementation, Thailand could soon emerge as a net exporter, rather than net
importer, of capital.

At the same time, the combination of capital controls, amendments to the Foreign
Business Act, and the rescinding of government concessions to Thaksin's publicly
listed companies will all inevitably spook certain investors and lead to less
short-term capital inflow. It's clearly a risk a more discerning Thailand is willing
to take in the pursuit of more sustainable growth and protection against foreigners
exporting future economic volatility from Western to Thai shores.

For better or worse, Thailand's emerging economic model is one many regional
governments will likely give a long, hard look in the months and years to come.

Note 1. Thailand's predominantly foreign-invested electronics sector
contributes a substantial 35% to total national exports, but independent studies have
found that few properly dispose of their toxic waste. As of 2001, less than 10% of
the hazardous industrial waste produced in Thailand was properly stabilized,
processed and disposed of.

Thaksin's loss, US's gain

Thaksin's loss, US's gain

by Shawn W Crispin

BANGKOK - Thailand's unfolding political drama pitting exiled former prime
minister Thaksin Shinawatra against the military-run Council for National Security
(CNS) that ousted him has cast the United States in an awkward but familiar position,
where realpolitik imperatives now, as historically, have trumped Washington's stated
public position of non-support to governments that seize power through
anti-democratic means.

When coup makers ousted Thaksin last September 19, Washington was legally bound to
suspend about US$14 million in military-to-military aid earmarked for Thailand. The
US State Department on cue publicly admonished the CNS for seizing power through
undemocratic means and urged a quick return to democracy, which the junta has
promised for this year.

That's still the State Department's public line, but President George W Bush and
senior US envoys in Bangkok have signaled clearly to the junta that Washington has
scant intention of downgrading bilateral relations because of the coup.

In many ways, Thailand's coup has served US regional interests well. Thailand is
historically Washington's most trusted strategic ally in Southeast Asia, and US
officials are leveraging their senior military contacts now in government in a bid to
counterbalance China's expanding regional influence. While the US maintained strong
ties with Thaksin's authoritarian administration, particularly through cooperation on
counter-terrorism issues, there were concurrent concerns in Washington that the
ethnically Chinese Thaksin [1] was gradually moving Thailand closer to Beijing
at the United States' strategic expense.

Those concerns would help to explain why Bush received coolly last April Thaksin's
pleading personal letter, where the then-embattled premier claimed "anti-democratic"
forces were attempting to knock him from power through "extra-constitutional" means.
Of course those anti-democratic forces - the royalist military officials who
spearheaded the coup - were and remain some of the United States' best in-country
contacts. And since Thaksin's ouster, to the deposed premier's apparent chagrin, the
US has kept close working tabs with the junta and its interim civilian
administration.

Importantly, the suspension of military aid has so far been more symbolic then
substantive. As required by law, the US has suspended its International Education and
Training Program for Thai military officials, but the US Defense Department has
conspicuously tarried on decisions whether to scrap a joint memorandum on
military-to-military logistics, an arms-procurement program that provides cheap loans
to the Thai military when purchasing US hardware, the United States' continued use of
U-Tapao Air Force Base, and the annual Cobra Gold joint military exercises.

"The official US policy is mandatory, but we sense the [US] Defense Department is
trying to work its way around the measures," said an adviser to the Thai prime
minister. "Washington understands fully well that the military is in the driver's
seat and China is waiting in the wings." To underscore that point, he said, coup
leader and army commander General Sonthi Boonyaratklin made a recent trip to Beijing
for undisclosed reasons.

Moreover, the sanctions notably did not require the US to sever funding for the
secretive Counter-Terrorism Intelligence Center (CTIC), established jointly in 2001
between the US Central Intelligence Agency (CIA) and select Thai intelligence
officials. As of 2002, the US was providing annually between $10 million and $15
million as well as advanced surveillance equipment to the CTIC, which is tasked with
tracking and hunting down regional Muslim terror suspects.

According to the Washington Post, Thailand also hosted one of the CIA's
now-notorious secret prisons, where Muslim terror suspects were held without trial
and at times administered interrogation techniques that rights groups say are
tantamount to torture. Thaksin had publicly denied the existence of any CIA prison on
Thai soil, but because the US ally is not a signatory to either the United Nations
Convention Against Torture or the International Criminal Court, which hypothetically
could attempt to try US soldiers and CIA agents for war crimes, European diplomats
contend that Thailand would be a legally logical and secure location for such a
facility. (US officials in Bangkok have consistently declined comment on the
secret-prison allegations.)

That said, senior Thai police counter-terrorism officials have openly carped that
US Federal Bureau of Investigation terror-related sting operations have frequently
impinged on Thai sovereignty. Despite these official complaints, and Thaksin's push
for a highly unpopular free-trade agreement with the US, the anti-government
demonstrations that paved the way for his military ouster notably never took on an
anti-US bent - as did, for instance, the popular uprising of 1973 that led to the
downfall of the corrupt and heavy-handed regime of then-US-backed Field Marshals
Thanom Kittikachorn and Praphat Charusathien.

Xenophobic energies
The anti-Thaksin movement concentrated its xenophobic energies instead on Singapore,
which through its state-run investment vehicle Temasek purchased Thaksin's
family-held Shin Corporation in a controversial $1.9 billion transaction only months
before his ouster. The CNS has since inflamed still-simmering popular resentments
against Singapore, accusing the island state of using the satellite it purchased from
Thaksin to tap the mobile-telephone conversations of senior military officials.

That the CNS has played its foreign-bogey card against Singapore rather than the
US underscores the strong personal connections top coup makers have with senior US
political and military officials. While Thaksin pays US lobbyists to plead his case
on Capitol Hill, in Bangkok US officials are leveraging their military contacts to
score diplomatic points over China, which has pursued its diplomacy toward Thailand
more through political and economic rather than military channels.

The US military jump-started Thailand's move toward capitalism, pumping more than
$2.5 billion between 1951 and 1975 in military-related aid into the country to
develop a regional bulwark against the spread of communism. During those decades of
authoritarian military rule, the US often assisted in suppressing government
opponents, including pro-democracy activists, and the CIA frequently meddled in
Thailand's domestic politics. [2]

Fast-forward to the present, and it's no surprise when a Bangkok-based US diplomat
confirms that US-Thai military-to-military relations have remained firmly "on track"
despite the suspension in aid. Noted one longtime Thai observer: "The US is saying to
itself: they may be generals, but they're our generals."

Indeed, current premier and former army commander General Surayud Chulanont
received military-college training in the US and his presence in senior military
leadership positions was, according to one US diplomat, a factor in Washington's 2003
decision to elevate Thailand to the status of a major non-North Atlantic Treaty
Organization ally, a distinction that paved the way for the country to purchase
state-of-the-art US military equipment, including, presumably, the helicopters now
circling Bangkok on national-security patrols.

Former intelligence chief, new constitution-drafting chairman and pivotal
behind-the-scenes coup maker Prasong Soonsiri was trained and some say retained for a
stint in the 1980s by the CIA, and is now known to have close personal relations with
US Ambassador to Thailand Ralph "Skip" Boyce. The two developed their friendship
during the Thai-speaking Boyce's previous two postings to Thailand.

Most significant, perhaps, former prime minister and current Chief Privy Councilor
Prem Tinsulanonda, seen by many as the mastermind behind last year's coup, has strong
Cold War ties to several senior US Republican Party operators. During a private
dinner in 2000 sponsored by the Johns Hopkins University School of Advanced
International Studies, in a speech Prem voiced his "heartfelt" appreciation to Paul
Wolfowitz, then the school's dean, for his role in assisting Thailand after
Vietnamese communist troops invaded neighboring Cambodia in 1979 and threatened to
continue their march into Thailand.

While publicly condemning the Khmer Rouge for their atrocities, the US
simultaneously and clandestinely commenced funneling so-called "non-lethal" supplies,
including radio equipment, to the murderous Maoist group to help it hold the line
against Vietnam on Thailand's eastern border. It was a controversial decision that
re-cemented bilateral ties after a rocky period when the US abruptly pulled out of
Thailand after the Vietnam War - lasting ties that have influenced Washington's
decision concerning which side to take during Thailand's current political
standoff.

Repeating history
To some, the US has today made a similarly controversial policy position in
supporting the coup makers who ousted a twice democratically elected leader. While
publicly lamenting Thailand's retreat from democracy, and more recently criticizing
protectionist economic policies that threaten certain US business interests, in
private US officials have persistently reaffirmed to Thailand's ruling generals
Washington's long-term commitment to keeping bilateral ties on track.

During last November's Asia-Pacific Economic Cooperation meeting in Hanoi, Bush
met with Surayud on the sidelines and conveyed that Washington "understood"
Thailand's political situation. The following month, his father, former president
George H W Bush, paid a personal private visit to His Majesty King Bhumibol Adulyadej
- widely viewed in Thailand as a symbolic endorsement of the royalist coup.

For Washington, last year's military takeover has presented a unique opportunity
to steal a march from China, which through soft economic power has seen Beijing
consolidate strong alliances in neighboring Myanmar, Cambodia and Laos. It is
therefore no coincidence that Thaksin, spurned by what he perceived to be his former
US ally, has chosen to launch his anti-junta propaganda campaign, in attempted
divide-and-rule fashion, from China and Singapore.

In recent interviews with the mainstream Western media, Thaksin has endeavored -
doubtless at the advice of his Washington-based private lobbyists and public
relations consultants who arranged the appointments - to portray himself poignantly
as a popularly elected leader who has been ousted through illegal means.

International publications, including those previously sharply critical of
Thaksin's style of governance, have dutifully played up those themes - though at the
time of the coup Thaksin was no longer legally Thailand's elected leader after
annulled democratic elections in April, and in spite of his illiberal record of
promoting extrajudicial killings of drug suspects and disappearances of Muslim
militant suspects, and his systematic and punitive suppression of press freedom.

More seasoned observers draw parallels between Thaksin's current propaganda pitch
with former Thai fascist leader Field Marshal Phibun Songkhram, who from exile in the
1940s criticized the monarchy and portrayed himself as a man of the people, and who
on retaking power years later presided over a hard-knuckled, illiberal and corrupt
military-led regime that at times ran counter to Washington's wishes.
[3] Washington, it appears, has come to a similar conclusion about Thaksin's
usefulness to the United States' future interests.

One well-placed source close to Ambassador Boyce says that the US no longer views
Thaksin as a "political factor" and that to date Washington believes the junta is
doing a "satisfactory" job of administering the country. Should Boyce be proved wrong
and one day Thaksin return to political prominence - perhaps hypothetically after the
passing of King Bhumibol - the US can probably count on a piqued Thaksin avenging the
perceived snub by moving Thailand closer into China's regional orbit.

It's a calculated risk Washington is clearly willing to take and, at least for
now, Thaksin's loss is the United States' gain.

Notes
1. Although Thaksin pledged allegiance to his US roots during a visit to his alma
mater Sam Houston State University, where he joked that Texas was his second home,
many perceived his pilgrimage to the grave markers of his ancestors in China's Fujian
province as the more meaningful personal connection.

2. See Daniel Fineman's excellent A Special Relationship: The United States and
Military Government in Thailand, 1947-1958, University of Hawaii Press, 1997.

3. When Phibun was subsequently ousted in an internal 1957 putsch led by Field
Marshal Sarit Thanarat, who more than Phibun favored the United State's
foreign-investment-led development model, the US State Department issued a statement
three days later affirming the military coup would not alter bilateral relations.

1/09/2007

Lighten up on govt

Lighten up on govt

The last two public opinion polls and several of your editorials would seem to indicate that people are increasingly unhappy with the interim government because it is too slow in producing results.

After many years of listening to Mr Thaksin, I really distrust grandiose promises of instant results and I am content to watch this government work at a more calm, steady, thoughtful, legalistic and moderate pace as it methodically and systematically investigates and gathers evidence to present and prosecute corruption cases (among other things). Just the fact that this government is seriously engaged in building numerous corruption cases is a huge improvement over the lip-service Mr Thaksin used to give this subject.

I think we owe it to the members of this government to show a little more patience, understanding and yes, gratitude, for taking on what appears to be a dangerous and pretty much thankless task, instead of constantly criticising them for moving too slowly and trying to pressure them into taking some precipitous action that we may all come to regret. Solid accomplishments and meaningful change take time and I think we at least owe them that.

Junta faces charges they are too gentlemanly for their own good

Analysis: Junta faces charges they are too gentlemanly for their own good

Are the CNS and the government tough enough to ensure stability in their administration?

by Nattaya Chetchotiros

The Surayud government and Council for National Security (CNS) are
caught between a rock and a hard place. The New Year's Eve bombings
have highlighted this fact. The dilemma for the coup-makers and the
interim government is how tough they should be with the so-called "old
power" network. If they are ruthless and uproot elements associated
with former prime minister Thaksin Shinawatra, they risk being labelled
as power-hungry and unfair.

Should they do this in a more compromising, gentlemanly fashion - which
apparently is the path both the Surayud government and CNS have been
pursuing - then there is the greater risk that their stability will be
rocked, which is the case at present.

It has been almost four months since the Sept 19 military coup. So far,
the interim government and CNS have not effectively touched the "old
power" network which they allege was corrupt. The "clique" connotes not
only Mr Thaksin and his family but a whole network of militarymen,
policemen, bureaucrats, business and grassroots people who benefited
from the Thaksin administration's populist policies.

Somjai Phagaphasvivat, from Thammasat University's Faculty of Political
Science, says that unless the CNS and the government get tough with
these remnants of old power, they are unlikely to get their job done.

He says there are people who gained some form of benefit from the past
administration who have managed to stay on in the current one, as well
as in the CNS. Their presence makes it difficult for the coup-makers or
the government to come up with evidence against the Thaksin government
or any effective clean-up measures, as they are afraid they would be
dragged into the net too.

Besides, both the government and CNS are under pressure to be fair to
the old power. They have chosen to stick to the law and follow a lawful
and transparent - albeit slow - process of investigating corruption
allegations instead of seizing the assets first, which was what every
coup-maker did in the past. The lenient approach, however, has given
room for the old power to do some manipulative work to destabilise the
government, Mr Somjai said.

To cope with the problem at hand, he suggests that the CNS and
government toughen themselves. They must be goal-oriented. They must be
decisive. If that means they must change their personnel, so be it.

"Although [CNS chairman] Gen Sonthi insists that all the eight leading
members of the CNS are united, I believe this will remain so for no
more than two months. They will face increasing pressure from the
international community. They will face a crisis of confidence. They
will be forced to make some kind of change," Mr Somjai said.

As for the government, the political scientist suggests that it rethink
and, if possible, immediately overhaul its communications strategy,
especially its use of the mass media. Unlike the media-savvy Thaksin
government, the Surayud team has no edge in this area. Even the
government's spokesman is not well-versed in politics or capable of
explaining anything of meaning to the public.

Mr Somjai added that the government does not seem to have any long-term
plan or strategy when it comes to politics, either. At present, it
seems to be dealing with each problem as it arrives. The cabinet may be
able to boast of their overall qualities as good, decent people, but it
suffers terribly from being collectively dull as well.

In short, when it comes to political and communications strategy, the
Surayud government is outclassed by its predecessor, he says. "It may
be the case that the situation at present is too vile for a good person
like Gen Surayud. By their nature, the government and CNS may not be
suitable for the situation and that is why they have not succeeded in
managing the administrative power they have seized," Mr Somjai said.

Chaiyan Chaiyaporn, a political science lecturer at Chulalongkorn
University, however, does not believe the government or CNS can get
tough and rough things out the way coup-makers of the past might have
done. Considering the coup's lack of legitimacy in the eyes of the
international community, and the fact that the CNS and government would
not want to turn 16 million people who voted for Mr Thaksin in the past
into their enemy, the reconciliatory approach they have taken was their
only option.

He agreed with Mr Somjai that this choice has its setbacks in the
bureaucratic foot-dragging, thus causing delays in exposing alleged
irregularities of the past government. The slowness may upset the
public, which is keenly waiting for results of the investigations.

Mr Chaiyan believes that the New Year's Eve bombs in Bangkok has
diverted the public's attention from the important matter at hand,
which is the ongoing corruption investigation. To regain their footing,
the lecturer suggests that the government and CNS take everyone who has
any connections with Mr Thaksin off the Bangkok bomb investigation team
- be they deputy national police chief Pol Gen Achiravit Supanpesat,
assistant national police chief Pol Lt-Gen Jongrak Chuthanont or Pol
Lt-Gen Panupong Singhara na Ayudhya who has been assigned to head the
investigation.

"These officers are known to be close to Thaksin but the government has
kept them in their jobs. The result is we haven't seen any solid
evidence or much progress in the case, which further discredits the
government," said Mr Chaiyan.

Gen Winai Phattiyakul, defence permanent secretary and
secretary-general of the CNS, said that Prime Minister Surayud's
interviews suggest that he has given a deadline for the national police
chief Kowit Wattana to come up with answers regarding the eight blasts
in Bangkok. If the deadline lapses and nothing comes up, the CNS will
miss one member, but that wouldn't be a problem.

"Our friendship remains the same. The question of professional
efficiency is not related to that," Gen Winai said. He admitted that
both the government and CNS are not yet on top of the country's
political developments. He also conceded that they will need to adjust
their planning and communications.

A source close to PM Surayud revealed that the government is perceived
as being weak because it can't put its own people in key offices,
especially in the national police force, which is seen as a seat of
power of the ousted prime minister who was a former policeman.
According to the source, calls were made to PM Surayud to fire the
police chief. But then again, the government has its hands tied in its
attempt to do things properly and not give the impression that it was
unfairly bent on firing Mr Thaksin's people.

The problem is the "old power" clique has at their disposal an almost
limitless amount of money. From now until June, when the case against
the Thai Rak Thai party will be heard, the money and old power network
can cause a lot of chaos. The government and CNS will need to make a
quick decision - whether they want to get tough, or continue to act the
gentleman.